Smart contract developers have more options than ever before, thanks to the growing number of prominent Ethereum competitors, smart contract platforms, and layer-2 networks available in 2023. Leading Ethereum alternatives like Polygon, BNB Chain, Avalanche, Fantom, and Arbitrum are advancing Web3 adoption by providing a stable environment for the development of decentralized applications (dapps). While Ethereum has the largest and most active development community, developers often seek alternatives to Ethereum with lower transaction fees and higher throughput.
In this article, we’ll dive deep into the leading Ethereum competitors and smart contract platforms in 2023. We’ll explore why so many developers are seeking alternatives to Ethereum. Also, we’ll discuss the pros and cons of using Ethereum alternatives and layer-2 networks like Polygon, BNB Chain, Avalanche, and Fantom. Plus, we’ll provide a list of smart contract platforms that aim to improve on Ethereum’s pioneering technology.
What is Ethereum?
Ethereum is a decentralized public blockchain network and the number-one smart contract platform. It laid the foundations for many of the Web3 platforms and blockchains available today and is the backbone of the decentralized finance (DeFi) ecosystem. Ether (ETH) is the native cryptocurrency of the Ethereum network. It plays an essential role in securing the network via the Proof-of-Stake (PoS) consensus mechanism and is the primary unit of account throughout the network. Also, anyone who holds a minimum of 32 ETH can participate in consensus and earn transaction fees in return for validating transactions.
Furthermore, Ethereum aims to address the inefficiencies associated with Bitcoin, the original and largest blockchain. Bitcoin transactions can take several hours to finalize. Also, Bitcoin can only process seven transactions per second (TPS). While these characteristics aid the security of the Bitcoin network, many consider Bitcoin to be too slow for everyday transactions. By contrast, Ethereum can process 20 TPS and is expected to process up to 100,000 TPS upon completion of the Ethereum 2.0 roadmap. When compared to Visa, which can process around 24,000 TPS, it’s clear that Bitcoin isn’t suitable for large-volume transactions (although the Lightning Network aims to address this). On the other hand, Ethereum is scaling to compete with the likes of Visa.
The Ethereum development team is responsible for a significant amount of the innovation that we see today in Web3. Ethereum’s technology has spearheaded many of the biggest trends in Web3, including DeFi, non-fungible tokens (NFTs), the metaverse, decentralized autonomous organizations (DAOs), smart contracts, and the development of decentralized applications (dapps).
Smart contracts are automated agreements that live on the blockchain. They allow multiple parties to create trustless, immutable agreements in a secure, permissionless environment. Smart contracts facilitate token launches, dapps, marketplaces, DAOs, and many of the other complex structures found in Web3. Ethereum is the go-to platform for smart contract development and is home to the largest and most dynamic development team in Web3. However, Ethereum can be problematic for developers during periods of network congestion.
Before Ethereum 2.0, Ethereum developers and users had to endure drastic gas price fluctuations. At the peak of the 2021 bull run, transaction fees spiked dramatically, and users had to wait a long time for transactions to finalize. Not only did this make the platform too expensive for a lot of retail investors, but it also created an unstable environment for developers. This gave rise to a string of Ethereum competitors and the creation of several alternative smart contract platforms.
Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is a state machine conceptualized by Vitalik Buterin and designed by Gavin Wood. The EVM is a continuously-operational, Turing-complete program that provides a run-time environment for smart contracts and other types of code. It connects to every node in the Ethereum network and enables developers to run all kinds of programs written in multiple languages. Plus, the EVM determines computation rules for each new block.
Furthermore, the EVM is maintained by a decentralized network of nodes and is responsible for handling every transaction on the Ethereum network. It decides what nodes can add to the blockchain ledger and what they cannot.
Moreover, the EVM changed the face of the blockchain industry by allowing developers to deploy code without disrupting the entire network. Since its creation, many other smart contract platforms and Ethereum competitors have adopted the EVM or variations of it. Moreover, many consider the EVM to be an essential component of Web3, which could explain why so many blockchains use it for smart contract development.
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List of Smart Contract Platforms and Ethereum Competitors in 2023
Several Ethereum alternatives are available to developers. In the list of smart contract platforms below, we explore the best alternatives to Ethereum and layer-2 scaling solutions to look out for in 2023.
Polygon Network, previously known as “Matic” is an EVM-compatible Ethereum layer-2 solution. It was created to help Ethereum scale more efficiently and operates as a sidechain, an independent chain alongside the main Ethereum chain. Polygon uses a two-way bridge to connect to Ethereum. However, it has an independent architecture and consensus mechanism.
Polygon provides users with a greater degree of flexibility than Ethereum. Also, Polygon inherits the security and interoperability of the Ethereum blockchain while providing lower fees, faster transactions, and higher throughput. MATIC is the native cryptocurrency of the Polygon and helps to secure the network via Delegated Proof-of-Stake (DPoS) consensus and on-chain governance. Also, MATIC is used for paying gas fees and interacting with dapps and DeFi protocols throughout the Polygon ecosystem. Many leading DeFi protocols on Ethereum support Polygon. However, several Polygon-native platforms have been developed on the leading Ethereum competitor.
Furthermore, Polygon’s DPoS consensus mechanism has a lower barrier to entry for participation than Ethereum. While both networks require validators to stake the native crypto asset to validate transactions and earn a share of fees, Polygon allows delegators to stake MATIC with a validator to earn a share of transaction fee rewards without running a full node.
Moreover, Polygon allows developers to build, deploy, and scale dapps on Polygon using Ethereum tooling. Polygon recently partnered with Mastercard to launch a Web3 incubator program to create new opportunities for artists in the emerging digital economy. This partnership highlights the growing positive sentiment towards Polygon.
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BNB Chain, previously known as Binance Smart Chains (BSC), is a decentralized, EVM-compatible blockchain network developed by Binance, the leading centralized crypto exchange by trading volume. Although BNB Chain was founded by the team behind the centralized exchange, it has grown into one of the leading community-driven smart contract platforms in 2023 and is home to a thriving ecosystem of DeFi protocols.
BNB Chain has a throughput of 300 TPS with a block confirmation time of three seconds. It also uses a PoS consensus mechanism like many other Ethereum alternatives. Plus, holders of the native BNB cryptocurrency can stake a minimum of 10,000 BNB to participate in consensus and earn a share of transaction fees generated throughout the network.
Avalanche is a public blockchain network that uses the native AVAX token to power its PoS consensus mechanism. It aims to solve the blockchain trilemma of achieving decentralization without compromising on security and scalability. Developers can deploy Solidity smart contracts on Avalanche, making it a suitable platform for Ethereum developers.
Furthermore, Avalanche boasts a throughput of 4,500 TPS with a block finality time of one second. Several prominent dapps support Avalanche, including Aave and Curve Finance. Moreover, Avalanche is home to a thriving ecosystem of DeFi protocols and NFT marketplaces.
Next on our list of smart contract platforms is Fantom. Fantom is a highly-scalable smart contract-enabled blockchain with a throughput of 25,000 TPS and a block confirmation time of one second. Like many other Ethereum competitors, Fantom aims to solve the blockchain trilemma by scaling without compromise.
The native FTM token powers the novel Lachesis PoS consensus mechanism and is essential for protocol governance and transaction fee payments on the various dapps that support Fantom. Moreover, Fantom is among the fastest blockchains in our list of smart contract platforms.
Arbitrum is an Ethereum layer-2 platform that aims to reduce congestion on Ethereum by improving transaction speeds and making it easier for developers to launch and scale dapps. The platform has a throughput of 4,500 TPS, is fully EMV-compatible and has significantly lower transaction fees than Ethereum. Developers can launch Ethereum smart contracts on Arbitrum without friction. Also, Arbitrum provides additional privacy features you don’t get when transacting natively on Ethereum.
Some of the top Ethereum dapps are compatible with Arbirum, including Aave, Curve, and Uniswap. Any Ethereum developers looking to launch dapps can do so on Arbitrum using unmodified EVM smart contracts. Plus, these contracts inherit the security of the main Ethereum chain while benefiting from increased speed and lower fees.
Arbitrum uses optimistic rollups, a technology that “rolls” multiple transactions into batches and executes them on a layer-2 sidechain in a cost and energy-efficient way. This method helps to prevent congestion on the Ethereum blockchain by taking computations off-chain before publishing the results on-chain. Moreover, Arbitrum works with Ethereum tooling and programming languages like Solidity to make deploying Ethereum smart contracts simple. Unlike many Ethereum alternatives, Arbitrum has no native token.
The final entry in our list of smart contract platforms is Optimism, a fast and scalable Ethereum layer-2 network created by the Ethereum development team. In short, Optimism uses rollups to enable developers to build and deploy dapps using an EVM-equivalent environment at a fraction of the cost of Ethereum.
Furthermore, Optimism inherits the security of the Ethereum blockchain. It has a throughput of 200 TPS and a block time of two seconds and is influenced by Ethereum’s PoS consensus mechanism. Moreover, the OP token is the native cryptocurrency of the Optimism network and is used in protocol governance.
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Which Ethereum Competitors are the Best?
There are several ways to compare smart contract platforms in 2023. For example, DeFi is one of the most prominent use cases for smart contracts, so looking at the total value locked (TVL) across all DeFi platforms gives us an indication of how well each platform performs. According to defillama.com, over 60% of the TVL in DeFi is on Ethereum. BNB Chain is second with 10.74%, followed by Polygon with 2.67% and Arbitrum with 2.51%.
Furthermore, Avalanche has 1.94% of the TVL in DeFi, while Optimism has 1.28% and Fantom has just over 1%. However, TVL is one of many metrics for determining the success of a network. For example, looking at the number of protocols built on different blockchains gives us a better understanding of how TVL is distributed throughout a network. Likewise, we can glean a lot of information by looking at the daily transaction volume. In each case, Ethereum comes out on top within the DeFi ecosystem; Ethereum has 629 DeFi protocols and $800 million in daily volume.
BNB Chain follows with 523 protocols and $147 million in daily volume. Polygon has 354 DeFi protocols and $63.8 million in daily volume, while Arbitrum has 162 protocols and 46.5 million in daily volume. Optimism has 96 DeFi protocols and $36 million in daily volume. Finally, Fantom has an ecosystem of 271 DeFi protocols transacting $5.4 million in daily volume.
This data shows that more than one metric is needed to determine the success of a smart contract platform. Also, while DeFi is a prominent use case for smart contracts, there are several other use cases. Moreover, looking at suitable programming tools, partnerships, and integrations may give developers a better idea of the future adoption potential of each platform.
Advancing Web3 Adoption
While BNB Chain has more TVL than Polygon, Polygon appears to be thriving in terms of partnerships. Some of the biggest companies sector-wide have launched Web3 projects on Polygon, including Adidas, Adobe, Disney, Meta, and Starbucks. Though BNB Chain partnerships exist, such as the Google Cloud integration, most are with Web3-native and BNB Chain-native projects. The same can be said for the other projects in our list of smart contract platforms. However, there are various notable projects under development.
For example, Pakistan’s Private Educational Institutions Regulatory Authority (PEIRA) has chosen the Fantom blockchain to launch its blockchain-powered certification and accreditation initiative. Also, digital payments company Wirex gives users access to DeFi protocols on Avalanche via the Wirex payments app.
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Alternatives to Ethereum: Pros and Cons
Decentralization is a defining characteristic of the Web3 movement. Nonetheless, some within the Web3 community are willing to forgo certain aspects of decentralization to encourage scalability and promote Web3 adoption. One of the benefits of Ethereum alternatives is that they mitigate the risks associated with network congestion. When Ethereum is congested, gas fees soar and transactions take longer to finalize. Because of the increase in transaction throughput that most Ethereum alternatives provide, gas fees tend to be more stable.
Furthermore, most Ethereum competitors offer significantly lower transaction fees than the leading smart contract blockchain, so gas price fluctuations are less impactful. Resultantly, layer-2 networks and Ethereum competitors can provide more stability for users and developers than Ethereum alone. However, there are several potential drawbacks to consider before using alternatives.
One of the biggest concerns about Ethereum alternatives is that some are more centralized. Most Ethereum competitors have smaller networks of nodes that are easier to attack or manipulate. Also, many layer-2 networks sacrifice aspects of decentralization or security for an increase in scalability. However, the growing popularity of Ethereum alternatives among users and developers suggests that these sacrifices may be considered worthwhile to some.
Another consideration when using smart contract platforms is the development community. Ethereum is home to the most extensive development community in Web3. It is the oldest and most-established smart contract platform. Plus, it has informed many of the technologies used by other platforms.
Ethereum Competitors: Exploring the Best Ethereum Alternatives and Smart Contract Platforms in 2023 – Summary
Ethereum is the go-to blockchain for dapp development and is more widely adopted than the competing smart contract platforms mentioned in this article. Various Ethereum competitors enhance user experiences by reducing transaction fees and increasing transaction throughput. These factors provide developers with a stable, cost-effective environment for developing dapps and getting them to market on time and within budget using familiar Ethereum tools.
Moreover, many of the leading Ethereum competitors are growing faster than the leading smart contract blockchain. While this is perhaps understandable given Ethereum’s pioneering role in Web3, it highlights the growing demand for Ethereum alternatives and EVM-compatible smart contract platforms with higher transaction speeds and lower fees.